State Aid to Saremar Ruled Illegal

MarineLink.com

Thursday, January 23, 2014

After an in-depth investigation, the European Commission has concluded that part of the support measures that Sardinia had granted to the maritime company Saremar in 2011 and 2012 was incompatible with EU state aid rules. In particular, a capital injection not approved on market conditions and the compensation for carrying out certain maritime services have provided an undue economic advantage to Saremar that its competitors did not have. Saremar needs to pay back this undue advantage of around €10.8 million in total, to remedy the distortion of competition this has created.

At the same time the Commission concluded that two letters of comfort issued by the Region did not guarantee any financial obligation of the company and did not therefore constitute State aid to Saremar. The Commission also concluded that the promotional activities carried out by Saremar were priced at market value.

Commission Vice President Joaquín Almunia, in charge of competition policy, said, "Member States and regional authorities are of course free to finance services of general economic interest. However, as foreseen by EU rules, this should be done in a transparent way, on the basis of clearly defined public service obligations."

In 2012 Saremar received capital injection from Sardinia for an announced amount of €6.1 million. The Commission concluded that no private investor operating under market conditions would have accepted to invest on these conditions in similar circumstances. The capital injection therefore constitutes state aid, as it conferred an economic advantage to Saremar as compared to its competitors, who have to operate without public money. Moreover, this state aid is incompatible with EU rules because it was not accompanied by the implementation of a restructuring plan fulfilling the requirements of the guidelines on state aid for the rescue and restructuring of companies in difficulty. The Commission has therefore ordered Italy to recover from Saremar the part of the capital injection already implemented.

Lastly, the Commission found that a €10 million compensation granted to Saremar for the operation in 2011 and 2012 of two maritime routes linking Sardinia to mainland Italy was not in line with EU rules on services of general economic interest (SGEI) (see IP/11/1571). These rules provide that public service providers can receive compensation for the net costs of the delivery of their public service obligations, where the parameters to calculate the compensation are established in advance and the public service obligations are clearly defined. However, when Saremar was entrusted with the operation of the two maritime routes, no compensation mechanism was set up for this activity. Moreover, the entrustment acts did not clearly define the public service obligations imposed on Saremar. The Commission therefore concluded that Saremar was not entitled to compensation and needed to pay back the sums it received.
Background
Saremar is one of the regional companies of the former Tirrenia Group. The company traditionally operated maritime services under a public service contract with the Italian State, in force until end 2008 but subsequently prolonged. In 2009, Saremar was transferred from Tirrenia to the Sardinian Region.

In October 2011 the Commission launched an in-depth investigation into public support measures in favor of companies of the former Tirrenia Group, namely Tirrenia di Navigazione, Caremar, Laziomar, Saremar, Siremar and Toremar (see IP/11/1157).

The Commission extended the scope of this investigation in November 2012 and amended it in December 2012, to take account of an additional aid measure notified by Italy.

Under the EU guidelines on rescue and restructuring aid, companies in difficulty may receive state aid under certain conditions. Such aid has a high potential of distorting competition in the EU internal market, as it artificially keeps companies alive that would have otherwise exited the market. Aid may be granted for a period of six months ("rescue aid"). Beyond this period, the aid must either be reimbursed or a restructuring plan must be notified to the Commission for the aid to be approved ("restructuring aid"). The plan must ensure that the long-term viability of a company is restored without further state support, that distortions of competition induced by the state support are addressed through compensatory measures and that the company contributes to the costs of restructuring. Finally, restructuring aid may be granted only once over a period of ten years ('one time, last time' principle).

The non-confidential version of the decision will be made available in the State Aid Register under the case numbers SA.32014, SA.32015 and SA.32016 (all concerning follow-on companies of the Tirrenia group) on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.